(The Conversation) – When she took to the floor to give her State of the Union speech on 13 September, European Commission president Ursula von der Leyen largely stood by the script. Describing her vision of an economically buoyant and sustainable Europe in the era of climate change, she called on the EU to accelerate the development of the clean-tech sector, “from wind to steel, from batteries to electric vehicles”. “When it comes to the European Green Deal, we stick to our growth strategy,” von der Leyen said.

Her plans were hardly idiosyncratic. The notion of green growth – the idea that environmental goals can be aligned with continued economic growth – is still the common economic orthodoxy for major institutions like the World Bank and the Organisation for Economic Co-operation and Development (OECD).

The OECD has promised to “strengthen their efforts to pursue green growth strategies […], acknowledging that green and growth can go hand-in-hand”, while the World Bank has called for “inclusive green growth” where “greening growth is necessary, efficient, and affordable”. Meanwhile, the EU has framed green growth as

“a basis to sustain employment levels and secure the resources needed to increase public welfare […] transforming production and consumption in ways that reconcile increasing GDP with environmental limits”.

However, a survey of nearly 800 climate policy researchers from around the world reveals widespread scepticism toward the concept in high-income countries, amid mounting literature arguing that the principle may neither be viable nor desirable. Instead, alternative post-growth paradigms including “degrowth” and “agrowth” are gaining traction.

Differentiating green growth from agrowth and degrowth

But what do these terms signify?

The “degrowth” school of thought proposes a planned reduction in material consumption in affluent nations to achieve more sustainable and equitable societies. Meanwhile, supporters of “agrowth” adopt a neutral view of economic growth, focusing on achieving sustainability irrespective of GDP fluctuations. Essentially, both positions represent scepticism toward the predominant “green growth” paradigm with degrowth representing a more critical view.

Much of the debate centres around the concept of decoupling – whether the economy can grow without corresponding increases in environmental degradation or greenhouse gas emissions. Essentially, it signifies a separation of the historical linkage between GDP growth and its adverse environmental effects. Importantly, absolute decoupling rather than relative decoupling is necessary for green growth to succeed. In other words, emissions should decrease during economic growth, and not just grow more slowly.

Green growth proponents assert that absolute decoupling is achievable in the long term, although there is a division regarding whether there will be a short-term hit to economic growth. The degrowth perspective is critical that absolute decoupling is feasible at the global scale and can be achieved at the rapid rate required to stay within Paris climate targets. A recent study found that current rates of decoupling in high-income are falling far short of what is needed to limit global heating to well below 2°C as set out by the Paris Agreement.

The agrowth position covers more mixed, middle-ground views on the decoupling debate. Some argue that decoupling is potentially plausible under the right policies, however, the focus should be on policies rather than targets as this is confusing means and ends. Others may argue that the debate is largely irrelevant as GDP is a poor indicator of societal progress – a “GDP paradox” exists, where the indicator continues to be dominant in economics and politics despite its widely recognised failings.

7 out of 10 climate experts sceptical of green growth

How prevalent are degrowth and agrowth views among experts? As part of a recent survey completed by 789 global researchers who have published on climate change mitigation policies, we asked questions to assess the respondents’ positions on the growth debate. Strikingly, 73% of all respondents expressed views aligned with “agrowth” or “degrowth” positions, with the former being the most popular. We found that the opinions varied based on the respondent’s country and discipline (see the figure below).

While the OECD itself strongly advocates for green growth, researchers from the EU and other OECD nations demonstrated high levels of scepticism. In contrast, over half of the researchers from non-OECD nations, especially in emerging economies like the BRICS nations, were more supportive of green growth.

Disciplinary rifts

Furthermore, a disciplinary divide exists. Environmental and other social scientists, excluding orthodox economists, were the most sceptical of green growth. In contrast, economists and engineers showed the highest preference for green growth, possibly indicative of trust in technological progress and conventional economic models that suggest economic growth and climate goals are compatible.

Our analysis also examined the link between the growth positions and the GDP per capita of a respondent’s country of origin. A discernible trend emerged: as national income rises, there is increased scepticism toward green growth. At higher income levels, experts increasingly supported the post-growth argument that beyond a point, the socio-environmental costs of growth may outweigh the benefits.

The results were even more pronounced when we factored in the Inequality-adjusted Human Development Index (IHDI), suggesting that aspects beyond income, such as inequality and overall development, might influence these views.

In a world grappling with climate change and socio-economic disparities, these findings should not simply be dismissed. They underline the need for a more holistic dialogue on sustainable development, extending beyond the conventional green growth paradigm.

Post-growth thought no longer a fringe position

Although von der Leyen firmly stood in the green growth camp, this academic shift is increasingly reflected in the political debate. In May 2023, the European Parliament hosted a conference on the topic of “Beyond Growth” as an initiative of 20 MEPs from five different political groups and supported by over 50 partner organisations. Its main objective was to discuss policy proposals to move beyond the approach of national GDP growth being the primary measure of success.

Image by Alexander Droeger from Pixabay

Six national and regional governments – Scotland, New Zealand, Iceland, Wales, Finland, and Canada – have joined the Wellbeing Economy Governments (WEGo) partnership. The primary aim of the movement is to transition to “an economy designed to serve people and planet, not the other way around.”

Clearly, post-growth thought is no longer a fringe, radical position within those working on solutions to climate change. Greater attention needs to be given to why some experts are doubtful that green growth can be achieved as well as potential alternatives focussed on wider concepts of societal wellbeing rather than limited thinking in terms of GDP growth.

Ivan Savin, Associate Professor of Business Analytics at ESCP Business School, Madrid campus & Research Fellow at ICTA-UAB, ESCP Business School and Lewis King, Lecturer in climate policy and green economics, Universitat Autònoma de Barcelona

This article is republished from The Conversation under a Creative Commons license. Read the original article.

1. The US tripled that amount of money invested in offshore wind in 2022 to $9.8 billion, according to Kassia Micek at S&P Global and Ros Davidson at Windpower Monthly.. Some of these investments were in bids let by the Biden administration for government controlled seas off the coast, but some $4 billion was invested in port infrastructure. The federal government leased 11.4 gigawatts of offshore wind capacity, which generated $5.4 billion for the government.

2. Davidson also says that state goals for offshore wind now stand at 77.4 gigawatts, which is more than twice President Biden’s stated target of 30 gigawatts from this source by 2030. While much of this new power generation capacity won’t come on line for several years, two large offshore wind farms, Vineyard Wind and South Fork Wind, will go live in the Atlantic this year. Those two will together generate as much as 1 gigawatt of new electricity, the amount put out by a small nuclear reactor. While nuclear plants have the advantage of being more consistent than wind, offshore winds blow more steadily than do those over land, and states are increasingly storing electricity with mega-batteries (California has 3 gigawatts worth), which allows more of the electricity generated actually to reach the grid. Over all, states will buy 25% more electricity generated by offshore wind in 2023 than they did last year.

Via Pixabay.

3. The Biden Administrations Inflation Reduction Act of 2022 gives 30% tax credits to companies that develop offshore wind installations, creating a new gold rush.

4. Wind turbines of all sorts now generate 10% of the electricity produced in the United States annually.

5. Wind and solar energy will continue to fall in price. Already, Jane Marsh reports at Environmental Protection, coal plants are 99% more expensive to operate than wind and solar farms.

6. Marsh says that renewable energy is increasingly a money-maker for investors and will generate nearly $3 trillion by 2030.

Climate change policy has entered a new era. The growing row between the United States and the European Union over the impacts of the new American green subsidy regime makes that all too clear. Yet in many ways, this story is ultimately about China.

For the last 20 years, developed countries have used three main types of policy to cut their greenhouse gas emissions. Renewable energy mandates have required electricity generators to invest in solar, wind, hydro and geothermal power. Emissions trading schemes for energy and industrial businesses put a price on carbon. And energy efficiency standards have been progressively improved on a whole range of products from vehicles and white goods to homes.

Applied across Europe and North America, this policy toolkit brought notable success. Developed countries’ emissions fell sharply, even with economic growth. Green technologies – from wind and solar to electric vehicles – fell in cost and improved in performance as demand for them rose.

A virtuous circle followed: climate policy increased demand for green technologies, which reduced costs, which allowed policy to be tightened, which stimulated demand and innovation further.

The rub

There were two problems, however. First, much of the economic benefit went to China. From 2010 onwards China rapidly became the world’s primary supplier of wind and solar technology, along with underpinning minerals like lithium, cobalt and rare earths.

China’s dominance reduced everyone’s costs. But it also meant that, as industrial jobs were lost in developed countries, they were not replaced by equivalents in the new energy sectors.

Second, climate policy began to create political opposition. As emissions targets tightened, countries started to see the costs reflected in consumer prices.

The most dramatic response emerged in France in 2018, when a relatively small increase in fuel duty led the so-called gilets jaunes (yellow jacket) protestors to block roads across the country for over a year, even after President Emmanuel Macron withdrew the tax. In the US, congressional opposition stymied President Barack Obama’s plans for a climate bill – including a modest carbon pricing scheme – for the whole of his presidency.

Joe Biden has learned the lesson. His Inflation Reduction Act (IRA), passed in 2022, offers climate carrots instead of sticks – and lots of them.

Via Pixabay.

The act – which despite its name is almost entirely about climate change – offers a mammoth US$369 billion (£306 billion) of tax credits and other subsidies to companies making low-carbon investments and to consumers buying green products. Critically, to take advantage of subsidies, a significant proportion of materials and equipment used must be produced in North America.

The EU position

Orthodox economists deplore the IRA. Subsidies are much less efficient than taxes (not to say more expensive), and protectionism raises costs to consumers.

Yet to any politician, Biden’s approach looks like a no-brainer. Don’t penalise businesses with carbon levies: reward them with tax credits. Don’t allow the employment benefits of climate policy to leak overseas to China: ensure they stay at home. Nearly three-quarters of Americans backed the act, including over half of Republicans.

The EU is alarmed at the likely effects. There are al ready reports of European cleantech companies planning to transfer production to the US, while others may be kept out of US markets. The European Commission has threatened the US with legal action at the World Trade Organization for breaking free trade rules, and has already secured US concessions, including extending tax credits to foreign-made electric vehicles.

Even more significantly, the commission president Ursula von der Leyen has announced a “green deal industrial plan” for the EU. The core will be a Net Zero Industry Act relaxing rules on state aid and providing subsidies for cleantech investment. Meanwhile, a Critical Raw Materials Act will build partnerships with like-minded suppliers to reduce dependence on Chinese imports, mirroring what the recent EU and US chips acts do with semiconductors.

The broader context

Both the EU and US are therefore turning climate policy into industrial and trade strategy. One might ask what took them so long. China’s twelfth five year plan in 2010 first identified seven environmental “strategic industries” on which to focus economic development. It is not a coincidence that China rapidly came to dominate the new low carbon sectors: it was literally the plan.

The EU and US moves are a desperate attempt to catch up, with Japan and South Korea not far behind. And the strategy extends beyond their own continents. The new kids on this block are multi-billion dollar just energy transition partnerships which the EU, US and other western powers have recently negotiated with South Africa, Indonesia and Vietnam.

These “JET-Ps” aim to stimulate investment, not just in the renewables transition but also in domestic industrial capacity. Loans and guarantees provided by western governments aim to leverage much larger flows of private finance. The goal is for these countries to manufacture and export their own green technologies, charting a new path for economic development.

More such partnerships will likely be announced over the coming year. This is not altruism on western countries’ part, but an attempt to offer an alternative to China’s huge investments in the developing world.

What about the UK? These developments leave the British economy in a badly weakened position. The EU was the obvious partner in green industrial policy. On its own the UK is not nearly large enough to compete.

It creates a compelling case for a future UK government to do a green trade deal with the EU. In return for a financial contribution to the EU’s green innovation funds, the UK could rejoin the single market for environment goods and services.

Just a few years ago, climate change was a subset of environmental policy. Today it is a key dimension of both economic strategy and geopolitics. Given the extent of the economic transformation it demands, no-one should be surprised.

Michael Jacobs, Professor of Political Economy, University of Sheffield

This article is republished from The Conversation under a Creative Commons license. Read the original article.

So Neoliberal economists will say, so what? Everybody gets richer with unfettered market capitalism. Why should we care if some people get really richer? Is it just envy?

See, the problem is that not everybody got richer. Some 1.7 billion workers, about half of the 3.32 billion people employed worldwide, saw their real incomes slip as inflation raced ahead of their wages. Some of the families of the workers at the bottom of the pile went to bed hungry in 2022 — 800 million of them.

Oxfam doesn’t say so, but the problem with this concentration of wealth in a few hands, those of the world’s 2,668 billionaires, is that they are not only hogging resources but they are way too powerful. It is from among this group that propaganda originates against our taking firm and swift steps to halt carbon dioxide emissions. They just want their piles of gold to grow, like Smaug the dragon in Tolkien. They don’t seem to care that their grandchildren will drown, or burn up in wildfires, or drop dead from heat exhaustion. Maybe they think their family wealth will protect them. But billionaires can die in sudden fires like anyone else.

Billionaires also distort democracy in menacing ways. They attempt to gut workers’ unions, as with Jeff Bezos at Amazon. In the absence of strong unions, workers’ real income declines over time, forcing some into poverty. The billionaires corrupt the courts. They engage in legislative capture, buying the very politicians who regulate their industries. They also form a powerful standing lobby for bad tax policy, i.e. tax breaks for the rich and the starvation of government in provision of services. Donald Trump should not have been allowed to use his personal fortune to buy the presidency. People like Trump are proof positive that making a lot of money is no guarantee of soundness of mind.

Oxfam’s conclusions are as follows:

“Since 2020, the richest 1% have captured almost two-thirds of all new wealth – nearly twice as much
money as the bottom 99% of the world’s population.
• Billionaire fortunes are increasing by $2.7bn a day, even as inflation outpaces the wages of at least
1.7 billion workers, more than the population of India.
• Food and energy companies more than doubled their profits in 2022, paying out $257bn to wealthy
shareholders, while over 800 million people went to bed hungry.
• Only 4 cents in every dollar of tax revenue comes from wealth taxes, and half the world’s billionaires
live in countries with no inheritance tax on money they give to their children.
• A tax of up to 5% on the world’s multi-millionaires and billionaires could raise $1.7 trillion a year,
enough to lift 2 billion people out of poverty, and fund a global plan to end hunger.”

H/t Oxfam.

The billionaires got rich off of the COVID-19 pandemic, indirectly. Wealthy countries such as the U.S., faced a deflationary situation brought on by the shut-down of businesses and the reluctance of many in the public to go out for shopping, dining and entertainment. They responded correctly, by pumping government stimulus monies into the economy. The extra money supply, however, drove up asset values, held disproportionately by the rich, who scooped up literally trillions of dollars in profits. Since in most wealthy countries you only pay taxes on securities when you sell them, this vast new amalgamation of filthy lucre remained beyond the grasp of the tax official.

In 2022, even as the pandemic was lightening, 95 food and energy corporations doubled their profits, Oxfam says.

Even more horrible, during the COVID crisis, the progress the nations of the world had made since 1990 in lifting people out of extreme poverty was reversed, with 500 million persons falling back into it The proportion of the world living in extreme poverty in 2000 was 14.3%. The amazing programs coordinated by the UN were able to reduce that percentage to 7.1% in 2019. There is no prospect of most of those in extreme poverty getting out of it in this decade.

All tax policy is a redistribution scheme. Low taxes on the rich result in gobs of money being thrown at them, and in a reduction of state support for education, infrastructure, and other key services that allow people at the bottom to be upwardly mobile.

It is like the government is a person with a snowblower cleaning their driveway. If the person consistently aims the snowblower at a particular spot, that spot will end up with a big mound of snow, and the rest of the area around the driveway will be flat. The snowblower’s direction is tax policy.

Oxfam suggests a sensible solution to these problems. Tax the rich more, and the super-rich most.

The U.S. in the 1950s was a Republican paradise, with strong economic growth in the corporate sector. The highest tax rate then was 90%, and taxes were progressive. We don’t need a radical solution. We just need Republican President Ike Eisenhower’s tax policies back.

Oxfam points out that Costa Rica has already raised taxes on the wealthy by 5%, and some other countries are also rethinking their tax policy. In the wealthy countries, however, I fear that the marriage of the billionaires and the corrupt politicians is so immutable that the political will simply doesn’t exist to implement such steps.

Sooner or later, a billionaire (or trillionaire) is going to decide to dispense with the politicians and just take over, as Bonaparte defenestrated the members of the French parliament before summarily making himself emperor. We’ve already seen strong moves in that direction in the U.S. and Brazil.

That fuming — from would-be passengers of Southwest Airlines and their families — filled airports throughout this past holiday week. For good reason. At the height of the travel-heavy holidays, Southwest was canceling 60 percent of the airline’s daily flights. Over 15,000 Southwest planes never lifted off.

Late December’s heavy dose of stormy weather certainly did set the stage for Southwest’s holiday meltdown. But Southwest can’t put the blame for the airline’s massive melt on the cold, wind, and snow. Other airlines delivered, amid the same winter weather, far better service.

So what did Southwest in? The airline’s top execs, analysts point out, have spent years underinvesting in needed new tech. One telling example: This past November, a generation into the electronic age, Southwest officials acknowledged that the airline was still delivering weather and baggage reports to pilots and gate managers on paper.

“It almost became a running joke around the company,” says Southwest flight attendant union president Lyn Montgomery, “that we aren’t able to make certain changes because it would involve technology.”

During the holiday storm crisis, some Southwest employees phoning in for instructions from the airline found themselves on hold for over five hours. Some even went to sleep with their phones — still on hold — next to their bedsides. They awoke the next morning, reports the Dallas Morning News, to find their phones still holding.

Why didn’t Southwest invest in new tech?

“Modifications and refinements to systems,” last year’s Southwest annual report explained, “have been and are expected to continue to be expensive to implement and can divert management’s attention from other matters.”

What sort of “matters” struck Southwest execs as more important than keeping their planes on time? Keeping shareholders happy — and themselves richer in the process. Everything else could wait.

Top management has readily admitted as much. In one pre-Covid “earnings call” with stock analysts, the Washington Post noted last week, then-CEO Gary Kelly explained that the airline had been delaying the tech upgrades his operations team had been seeking.

“We have starved them a little bit over the last decade,” he explained, “because again, our focus was more on the commercial side.”

Money that should have been going into upgrading Southwest’s operations has gone instead into dividends and stock buybacks. Since 2015, the Los Angeles Times analyst Michael Hiltzik reported last week, the airline “has paid out about $1.6 billion in dividends and repurchased more than $8 billion in shares.”

Those moves have worked out exceedingly well for top Southwest execs like CEO Kelly, the airline’s chief exec until early last year. In 2020, Kelly pulled down a “record $9.2 million” at the same time the Covid outbreak had the airline $3.1 billion in the red and a quarter of the Southwest workforce taking voluntary leave. CEO Kelly then took home another $5.8 million in 2021 before retiring early in 2022.

“Southwest’s well-compensated executives could have prioritized its workers and customers by preparing for the worst, but greed trumped all as they put a small group of wealthy investors first,” charges Kyle Herrig, the president of the corporate watchdog Accountable.US. “Consumers shouldn’t be the ones stuck holding the bag for Southwest’s greedy management decisions, but here we are.”

Southwest took in a $7-billion federal bailout during the Covid crisis, then showed its appreciation to America’s taxpayers by becoming, early last month, the first Covid-subsidized airline to announce plans to resume paying out dividends to shareholders, to the tune of $428 million in 2023.

“The reinstatement of our quarterly dividend,” Bob Jordan, Southwest’s new CEO, proudly noted during this dividend announcement, “reflects our balance sheet strength and continued focus on generating consistently healthy earnings, margins, and long-term capital returns.”

Missing from that focus: the well-being of Southwest workers. Just a few weeks after announcing the upcoming new dividends, the “bomb cyclone” hit wide swatches of the United States the day before Christmas. Southwest ground workers soon found themselves working 16-to-18 hour days, with some, says  their union president Randy Barns, ending up frostbitten.

Some lawmakers in Congress are now calling for a serious overhaul of how the United States goes about its airborne business. America’s airlines have essentially been calling the shots, notes a Washington Post analysis, ever since the Airline Deregulation Act of 1978 iced state regulators out of the picture and “left airline companies accountable only” to the federal Department of Transportation, an agency that’s never prioritized consumer protection.

“Southwest simply has failed to prepare for the worst and that’s a fundamental breach of trust,” charges Connecticut U.S. Senator Richard Blumenthal, who wants to see Congress enact a passenger bill of rights. “They said to passengers, in effect, if things go south, you are the ones who will bear the burden.”

Outside the United States, in nations ranging from Argentina and Malaysia to Finland and Fiji, airlines essentially operate as a public utility, not an opportunity for big CEO paydays. Scores of nations, points out journalist Joe Mayall, currently “either own airlines outright” or hold majority-shareholder status.

The United States could join that camp, Mayall notes, if Congress chose to charter a state-owned enterprise  to start up a new national airline. Or Congress could go the nationalization route by buying up enough stock “in publicly traded airlines to acquire a controlling share.”

Could the United States afford to take that sort of nationalizing step? The four most dominant U.S. airlines — Delta, American, United, and Southwest — last summer held a combined market value of $77.5 billion, Mayall points out, just $5 billion less than the $72.6 billion in our tax dollars that funded the federal government’s airline bailouts after 9/11 and during Covid.

Via ) Inequality.org

The Chinese press in Arabic said that the goal of the premier’s visit was to find ways of cooperating in the face of a global economic slowdown, an increase in bloc politics, widening wealth gaps, as well as escalating food and security crises.

According to BBC Monitoring, King Salman and Xi Jinping signed six major agreements fostering greater cooperation. One concerned an attempt to harmonize China’s Belt and Road Initiative and Saudi Arabia’s Vision 2030, an attempt to diversify the economy away from an over-dependence on petroleum exports.

Mohammed Bin Salman is well aware that the days of petroleum are numbered, and his Vision 2030 is intended to set Saudi Arabia on a sound post-oil footing by diversifying the economy and using the country’s sovereign wealth fund and vast currency reserves to fund this transition. Chinese investment and trade are viewed as important to the transition. For China to incorporate Saudi Arabia into its One Belt, One Road global transportation and trade infrastructure plan would help in this shift. Moreover, the Gulf Arabic press stressed, the GCC countries feel that in the past they have put too many of their eggs in the American basket, and they want to avoid depending so deeply on one superpower in the future.

Al Jazeera says that earlier on Thursday, Xi was welcomed by Saudi Crown Prince Mohammed Bin Salman, just before the convening of a summit between the two countries.

Xi Jinping will meet not only Saudi authorities but also those of the six-nation Gulf Cooperation Council (GCC) and thirty 30 heads of state or of international organizations. The Chinese delegation is expected to sign commercial and other agreements worth $30 billion.

Xi will meet on Friday with the GCC leaders (comprising Bahrain, Kuwait, Oman, Qatar,Saudi Arabia and the United Arab Emirates).

Xi said that he would work with the Gulf Cooperation Council to build a new, multi-dimensional relationship regarding energy and in the field of diplomatic partnerships.

For their part, Saudi authorities pledged to create a new regional center in Saudi Arabia for Chinese factories.

The two countries signed 34 investment agreements on Thursday in the fields sof green energy, technological knowledge, cloud services, transportation, construction and other sectors.

The Saudi and Gulf dedication to diversifying their economies, given the short timeline for the end of petroleum as a transportation fuel, has caused them to expand relations with China. This move has provoked fears in the United States concerning a growing partnership between Saudi Arabia and China in sensitive infrastructure in the Gulf.

BBC Monitoring reports that green hydrogen, the teaching of Chinese in Saudi Arabia, and incentives for mutual direct investment formed components of the deal.

As the devastation of climate change makes the need to decarbonise clearer by the day, countries face the question of what to do with their old fossil fuel infrastructure. While some environmental activists have taken to sabotaging the carbon economy on the back of its emissions in the Global North, the picture is different in oil-producing countries of the Global South, where energy infrastructure has fed communities for decades. There, the emphasis is placed on memory and institutionalisation.

Oil’s conquest of Iran and Malaysia

The cases of Malaysia and Iran, where oil has significantly contributed to economic growth, give us a glimpse into how authorities are currently reckoning with their fossil fuel heritage. In the 20th century, the arrival of international oil companies in the major port cities on the Persian Gulf in Iran and the South China Sea in Malaysia transformed the built environment, accelerated urbanisation and impacted peoples’ everyday lives. Even today, the dynamics and actors of oil in Iran and Malaysia continue to reshape industry, society, culture, and politics while leaving their mark on the built environment and urban spaces.

Founded in 1978, the International Committee for the Conservation of the Industrial Heritage (TICCIH) is an international organisation established to explore, protect, conserve and explain the remains of industrialisation. In 2020, it published the first global assessment of the heritage of petroleum production, the oil industry and the places, structures, sites, and landscapes that might be chosen to conserve for their historical, technical, social, or architectural attributes. In a 2020 report, the organisation defined the heritage of the petroleum industry as

“the most significant fixed, tangible evidence for the discovery, exploitation, production, and consumption of petroleum products and their impact on human and natural landscapes”.

Iran’s petroleum museums

Less than a decade ago, Iran’s Ministry of Petroleum began to consider establishing museums with a view to preserving the country’s industrial heritage. Those in the port city of Adaban in the country’s southwest, include an old refinery, gas station, and the oldest oil-related technical training school. In sections of the old ports, passersby can appreciate cranes and heavy machinery, such as the Akwan and Sulfur cranes, as well as an exhibition about the reconstruction of the refineries following the Iran-Iraq war (1980-1988).

The country is projecting to open other oil museums in major oil port cities. One of them is Masjed Suleiman, a city in the southwestern province of Khuzestan widely recognised as the birthplace of the oil industry in the Middle East. Its museum hosts the oldest oil recovery site in the region. In Tehran, the Museum of Oil Industry Technology will detail the nature and importance of oil, gas, and petrochemicals since 1901. It was in that year that the British speculator William D’Arcy received a concession to explore and develop southern Iran’s oil resources.

When the oil industry refuses to die

In Malaysia, the oil industry is omnipresent in everyday life, which raises challenges to global decarbonisation efforts. The national oil company Petronas is visible everywhere, from the dissemination of scholarships, the establishment of a university, and the iconic Petronas Twin Towers to the transformation of sleepy towns into sprawling industrial complexes. The industry goes back to the early 1900s, when oil was struck in the jungles of Miri, Sarawak, under British rule.

The conservation of Malaysia’s oil legacy has proven somewhat challenging, as most rigs are located offshore and sites still very much in use. Efforts have also been limited and lack a centralised plan. In a federal nation, each state dictates its own policies, which extends to museums. Under the Sarawak Tourism Board, the oil rig in Miri has been transformed into a museum and tourist site but remains the only one of its kind.

Conservation efforts have mainly focused on education with an emphasis on science and technology. Most attractions, such as the Petrosains Discovery Centre and the Petronas University of Technology, prioritise public awareness and learning. Malaysia’s national narrative is consistently upbeat – that the oil industry has improved society, transformed of remote villages, advanced educational opportunities, and led to dramatic changes in landscapes and cityscapes.

Toward post-pandemic and post-oil futures

Malaysia and Iran have taken different approaches when preserving the oil industry as part of their tangible and intangible cultural heritage. Nonetheless, a common element of is to separate the oil industry from its imperial pasts by preserving historical sites and narrating them as part of the national narrative.

For Malaysia, Petronas and the oil industry is promoted as a success story, intertwining petrol and nationalism. The preservation of the Miri oil rig as a tourist site serves the dual purpose of an attempt to safeguard the historical value of the location and to integrate it as a part of Sarawak’s story.

However, rising concerns about climate change, the environment, and corporate responsibility are increasing pressure on oil companies to reduce their carbon footprint by supporting clean and renewable energy, but these efforts appear to lag behind companies such as British Petroleum, which has moved into electric charging and renewable energy. Furthermore, the Covid-19 pandemic caused consumer demand for oil to plummet, which will likely continue to depress Iranian and Malaysian exports for the months to come.

The impact of the Covid-19 and climate crises

In the case of Iran, the Covid-19 crisis and the fluctuations in oil prices coincide with intensified sanctions by the United States against Iran, also known as the “maximum pressure campaign”. Despite its rich oil and gas resources, the country needs new technology investments and development plans to prepare for the post-fossil-fuel future. However, that will be hard to achieve without resolving US-Iran tensions and easing sanctions. To balance future economic growth with social development and environmental protection, Iran needs to invest more in plans for sustainable development and transition to less environmentally harmful energy sources.

Malaysia’s response acknowledges of the twin effects of Covid-19 and global warming: change in weather patterns and a decrease in demand for oil. Since the 2010s, there has been some movement in the energy sector to prepare for the post oil future. Over nearly a decade, Petronas has focused on solar power, wind energy and clean hydrogen, pledging to achieve net zero carbon emissions by 2050.

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But it took until 2020 amid the Covid-19 crisis and growing international awareness over the climate emergency for momentum to pick up. In 2021, the Ministry of Energy and Natural Resources set targets to decarbonise the country by 45% by 2030. While these efforts have been applauded, some hindrances remain, such as financial constraints and a lack of engagement with nongovernmental organisations.

Lessons from Malaysia’s palm oil heritage

Given changing global attitudes toward the oil industry, the question arises how the industrial heritage of Malaysia and Iran can be envisioned. Will oil rigs become relics of human greed instead of human advancement? And how will the national narrative reconcile this new reality with the importance of oil in the countries’ decolonisation process?

For Malaysia, it’s a question that has already been asked regarding palm oil and deforestation. Environmental activists in the country and abroad have highlighted their negative impact, which resulted in poor publicity for the country. However, through government engagement with youth and activists, there has been some improvement with how palm oil is viewed especially with regards to sustainability efforts.

Oil heritage perhaps needs to walk a similar path, encouraging honest conversations between policymakers, NGOs, industry stakeholders and historical organisations. The Covid-19 pandemic has also provided vital lessons and introduced new practices emphasising corporate responsibility toward workers. Improved governmental cooperation has also shown that it is possible to work toward common goals, which can be expanded to issues such as heritage. If implemented appropriately, such approaches may spell a bright future for how we view oil as part of a national narrative.

50th anniversary of the World Heritage Convention (16 November 2022): World Heritage as a source of resilience, humanity and innovation.

Rowena Abdul Razak, Guest Teacher in International History, London School of Economics and Political Science and Asma Mehan, Assistant Professor in Architecture and Urban History, Texas Tech University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

When record-breaking heatwaves cause train tracks to bend, airport runways to buckle, and roads to melt, as happened in the United Kingdom last month, it is likely that business performance will suffer.

The problem is not going away, either. Businesses will need to better manage extreme heat risk. But are investors sufficiently informed on the economic toll caused by the increasing frequency of extreme weather?

It is becoming clearer that extreme heat can have devastating and costly effects. People are dying, energy grids are struggling to cope, transport is disrupted, and severe drought is straining agriculture and water reserves.

While the frequency of these events is increasing, more worrisome is that heat intensity is also increasing. Clearly, businesses are not immune to the need to adapt, though their silence might make you think otherwise.

Rising temperatures affect everything

Keeping cool, transporting goods, and scheduling flights as runways melted were just some of the challenges people and businesses have faced during the current European summer.

As it became apparent that our workplaces and infrastructure might not be able to cope with extreme heat, we also saw unions call for workers to stay home. But could workers take the day off? The UK’s Health and Safety Executive stated:

There is no maximum temperature for workplaces, but all workers are entitled to an environment where risks to their health and safety are properly controlled.

Are these rules sufficient in this new normal? Some EU countries already have upper limits, but many do not. The Washington Post reported US federal action might be coming due to concerns over extreme heat for workers. Mitigation of these factors will no doubt be costly.

While media reports highlight the toll on workers and businesses, there is little empirical evidence on the financial hit to business. Here is where our research comes into play: how much of an impact does extreme heat have on business profitability?

Heat hitting the bottom line

We focused on the European Union and the UK because the region has a diversity of climate and weather extremes. They are a major economic force, with strong policies on decarbonising their economies, but also rely on coal, gas, and oil for many sectors.

When it’s hot, these countries are forced to burn more fossil fuel to cool overheated populations, contrary to the need and desire to do the opposite.

With detailed records on heat events at a local level, we connected weather data to a large sample of private and public companies in the EU and the UK. We focused on two critical aspects of a firm’s financial performance around a heat spell (at least three consecutive days of excessive heat): the effect on profit margin and the impact on sales. We also examined firms’ stock performance.

We found that businesses do suffer financially, and the effects are wide ranging.

For the average business in our sample, these impacts translate into an annualised loss of sales of about 0.63% and a profit margin decrease of approximately 0.16% for a one degree increase in temperature above a critical level of about 25C.

Aggregated for all firms in our sample, UK and EU businesses lose almost US$614 million (NZ$975 million) in annual sales for every additional degree of excessive temperature.

Impact bigger than the data shows

We also found the intensity of a heat wave is more important than its duration.

This financial effect might sound small, but remember, this is an average effect across the EU and the UK. The localised effect is much larger for some firms, especially those in more southern latitudes.

The stock market response to extreme heat is also muted, perhaps for the same reason. We find stock prices on average dropped by about 22 basis points in response to a heat spell.

These average annualised effects include businesses’ efforts to recoup lost sales during heat spells. They also include businesses in certain sectors and regions that appear to benefit from critically high heat spell temperatures, such as power companies and firms in northern European countries.

While we show a systematic and robust result, our evidence probably further underestimates the total effects of heat waves. That’s because businesses disclose very little about those effects due to lax disclosure rules and stock exchange regulations relating to extreme weather.

Financial data part of climate change

Without a doubt, better disclosure will help untangle these effects.

Ideally, financial data needs to be segmented by climate risk and extreme heat dimensions so investors are better able to price the risk. Regulators need to pay attention here. Investors must be able to price material risk from extreme weather.

A good example is New Zealand, which is about to mandate climate risk disclosures with reporting periods starting in 2023. Such mandates recognise that poor disclosure of climate risk is endemic, and we don’t have the luxury of time.

For those businesses negatively affected, disclosing the number and cost of lost hours and the location of the damage would be helpful. However, it is not yet clear if climate disclosure standards effectively capture these risks, as companies have significant discretion about what to disclose.

It is not necessarily all about cost – some sectors might even benefit. While power companies, for example, might report increased sales from increased energy consumption, they are also constrained by the grid and the increased cost of production.

And our evidence suggests there is little overall benefit to the energy sector. This doesn’t rule out some windfall profits, so we need to understand more about both the positive and negative effects on each industry.

Finally, this July saw temperatures in the United Kingdom soar to 20C above normal. Can businesses cope? Next time you feel the heat, pause to ask if this is also hitting the bottom line of your workplace or investment portfolio.

David Lont, Professor of Accounting and Finance, University of Otago; Martien Lubberink, Associate Professor of Economics, Te Herenga Waka — Victoria University of Wellington, and Paul Griffin, Distinguished Professor of Management, University of California, Davis

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Images: h/t Pixabay